Sales of new
single-family houses in January 2021 were at a seasonally adjusted annual rate
(SAAR) of 923,000 units (855,000 expected).
This is 4.3% (±18.1%)* above the revised December rate of 885,000 (originally
842,000 units) and 19.3% (±19.5%)* above the January 2020 SAAR of 774,000
units; the not-seasonally adjusted (NSA) year-over-year comparison (shown in
the table above) was +18.6%. For longer-term perspectives, NSA sales were 33.5%
below the “housing bubble” peak but 33.9% above the long-term, pre-2000 average.
The
median sales price of new houses sold in January slid ($6,700 or -1.9% MoM) to $346,400;
meanwhile, the average sales price jumped to $408,800 ($14,100 or +3.6% MoM). Starter
homes (defined here as those priced below $200,000) comprised 5.7% of the total
sold, down from the year-earlier 6.8%; prior to the Great Recession starter
homes represented as much as 61% of total new-home sales. Homes priced below
$150,000 were 1.4% of sales, down from 1.7% a year earler.
* 90% confidence interval includes zero. The Census Bureau does not have sufficient statistical evidence to conclude that the actual change is different from zero.
As mentioned in our post about housing permits, starts and completions in January, single-unit completions increased by 94,000 units (+10.0%). Because sales (+38,000 units; +4.3%) rose more slowly than completions, inventory for sale expanded in absolute terms (+8,000 units) but shrank in months-of-inventory (-0.1 month) terms.
Existing home sales nudged higher in January (40,000 units or +0.6%), to a SAAR of 6.69 million units (6.600 million expected). Inventory of existing homes for sale contracted in absolute terms (-20,000 units) but was unchanged in months-of-inventory terms. Because resales rose proportionally more slowly than new-home sales, the share of total sales comprised of new homes rose to 12.1%. The median price of previously owned homes sold in January retreated to $303,900 ($5,300 or -1.7% MoM).
Housing
affordability improved (+3.6 percentage points) as the median price of
existing homes for sale in December fell by $1,900 (-0.6% MoM; +13.2 YoY), to $313,700.
Concurrently, Standard
& Poor’s reported that the U.S. National Index in the S&P Case-Shiller
CoreLogic Home Price indices rose at a not-seasonally adjusted monthly change
of +0.9% (+10.4% YoY).
“Home
prices finished 2020 with double-digit gains, as the National Composite Index
rose by 10.4% compared to year-ago levels,” said Craig
Lazzara, Managing Director and Global Head of Index Investment Strategy at
S&P DJI. “The trend of accelerating prices that began in June 2020 has now
reached its seventh month and is also reflected in the 10- and 20-City
Composites (up 9.8% and 10.1%, respectively). The market’s strength continues
to be broadly-based: 18 of the 19 cities for which we have December data rose,
and 18 cities gained more in the 12 months ended in December than they had
gained in the 12 months ended in November.
“As
COVID-related restrictions began to grip the economy in early 2020, their
effect on housing prices was unclear. Price growth decelerated in May and June,
and then began a steady climb upward, and December’s report continues that
acceleration in an emphatic manner. 2020’s 10.4% gain marks the best
performance of housing prices in a calendar year since 2013. From the
perspective of more than 30 years of S&P CoreLogic Case-Shiller data,
December’s year-over-year change ranks within the top decile of all reports.
“These
data are consistent with the view that COVID has encouraged potential buyers to
move from urban apartments to suburban homes. This may indicate a secular shift
in housing demand, or may simply represent an acceleration of moves that would
have taken place over the next several years anyway. Future data will be
required to address that question.
“Phoenix’s 14.4% increase led all cities for the 19th consecutive month, with Seattle (+13.6%) and San Diego (+13.0%) close behind. Prices were strongest in the West (+10.8%) and Southwest (+10.5%), but gains were impressive in every region.”
The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.
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